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Currency Converter. Well, with loan rates still being held underwater by record Federal Reserve interference in the worlds primary bond market, the 2021 rate picture could quickly become the most detached from reality since 1966. As the crypto industry continues to evolve and mature, it's important for investors and users to remain vigilant and critical of the actions of crypto players. Citadel paid a $115,000 fine for these 502,243 violations. Mr. Buffett, in his annual report letter to shareholders released late in February, specifically mentioned fixed-income investors face a bleak future as inflation and economic growth accelerates after the pandemic. Scenario #1: the FED talks the big New York City banks into intentionally crashing the stock market first, thus relieving the building consumer confidence, spending and inflationary pressures. Binance's decision to distance itself from a regulated BUSD run as white lable solution from New York based Paxos and switch to a new unregulated stablecoin may be seen as a responsible move, but it also raises concerns about the reliability and consistency of stablecoins. The options to bet on such a move are extremely cheap. More than likely, a rapid increase in loan rates for businesses/consumers, alongside a rerating of equity valuation models to reflect far more bearish discount variables, could generate a memorable and painful rout in stock quotes in coming months. Terms: latest-news-headlines The true impact of the Fed's QE program will only become clear in the years to come, but it is clear that the cost of the program will be substantial. If they dont allow a bond market rout (likely cascading to a stock market tank similar to 1987), even bigger issues with our currency will hit like a bomb later in 2021. If the prices of bonds rise instead, the option will become less valuable and may eventually expire worthless. These instruments risk losing value over time due to attrition with the underlying holdings, even with the purpose of hedging. Markets expect the Fed to accelerate the exit from its bond-buying program, moving the end date from June to March. The yield on a 10 yr treasury bill represents the return an investor will receive by holding the bond for 10 years. U.S. Treasury bonds are long-term debt securities. Whatever the reason, it's clear that the US market is a crucial one for the crypto industry, and Binance's decision may have far-reaching consequences. CEO & Founder of blockXspace; Speaker and Influencer in the blockchain, metaverse, NFT, web3 space. Financial institutions, including banks and investment firms, could face losses as they hold large amounts of Japanese assets. iShares Short Treasury Bond ETF announced a monthly dividend on Tuesday, January 31st. If the situation in Japan worsens, it could trigger a chain reaction across the global markets. If the FED wants to keep Uncle Sam solvent past 2021, it may have to allow the U.S. bond market to deflate in 2021, a necessary effort to slow a surging economy and equity market. Going short the bond market means that an investor or trader suspects that bond prices will fall, and wishes to take advantage of that bearish sentimentfor instance, if interest rates are expected to rise. If you have an ad-blocker enabled you may be blocked from proceeding. What do you think? Tether, the issuer of the world's largest stablecoin, USDT, is under scrutiny once again as it has been revealed that the company used bank accounts opened with falsified documents in the past. I am not receiving compensation for it (other than from Seeking Alpha). 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Given our economy picks up steam as forecasted today by Wall Street consensus, and inflation spikes with the commodity explosion since last March, Treasury market rates should be at least 3% on the short end, and 4% on the long end of the duration curve in 6-9 months. Electronic Series I savings bonds: Can be bought for a minimum of $25 Are. This is partly due to the increase in bond yields, which has reduced the value of the Fed's bond holdings. Investors aren't making as much money on the classic 60/40 strategy as holding short-term bonds. Text. Paul was consistently ranked among top investment advisors nationally for stock market and commodity macro views by Timer Digest during the 1990s. Binance's decision to pull back on potential investments in the US raises critical questions about the future of the crypto industry and its relationship with regulators. "Our ratings on Kensington and Wellington reflect the funds' successful 30-plus-year record, low leverage (as measured by our adjusted value at risk [VaR]-to-net asset value [NAV] ratio), strong portfolio diversification, and focus on investing in liquid securities. This article is not an investment research report, but an opinion written at a point in time. This bet is an unreasonable ask for most investors so I sought an alternative. Additionally, Binance's motivation for the switch may be more profit-driven than security-driven, highlighting the need for investors and users to remain vigilant and critical of the claims made by exchanges and stablecoin issuers. Report. Fund expenses, including management fees and other expenses were deducted. Videos . "Bloomberg Opinion" columnists offer their opinions on issues in the news. Just a small rise in yields provides a huge payoff. https://bit.ly/3Ix2DFW, Paxos Under Investigation: Stablecoin Giant in Regulatory Crosshairs Put options on Government bonds are extremely cheap. At some point soon, if interest rates are not allowed to free float again, either capitalism will be supplanted by complete government management of the economy like other socialist experiments that ultimately failed miserably, and/or confidence in our currency by foreigners could implode. Form X-17A-5 Filer Information UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ANNUAL AUDITED REPORT Form X-17A-5 Part If the FED refuses to raise short-term savings rates and/or allow long-bond yields to increase a further 1-2% this spring, we could see a complete loss of confidence in the dollars exchange rate, forcing foreigners to liquidate U.S. financial assets. Mr. Franke was ranked #1 in the Motley Fool CAPS stock picking contest during parts of 2008 and 2009, out of 60,000+ portfolios. Amazon Pauses Construction on Second Headquarters in Virginia as It Cuts Jobs, Stock Traders Are Ignoring Blaring Bond Alarms, iPhone Maker Plans $700 Million India Plant in Shift From China, Russia Is Getting Around Sanctions to Secure Supply of Key Chips for War. Finally, long time fed critic, Jeffrey Gundlach, recently tweeted that the Federal Reserve was an outright failed and broken institution. (Master) also goes to #Citadel which Washes GFID OffShore . The cryptocurrency industry is still largely unregulated, and as such, it's up to investors to do their due diligence and carefully consider the risks associated with each exchange. That's how I am positioned. My argument today is the FED is stuck. I bet every company would love to have such a money printer! According to recent reports, the cost of the Fed's QE program has been substantial . In other words, they can print an infinite amount of money. 0. Citadel's hedge fund consists of a series of sub-funds that have varying investment strategies and asset classes including stocks, bonds and commodities. Nationally ranked stock picker for 30 years. These securities trade on stock markets and can be bought and sold throughout the trading day in any typical brokerage account. It is crucial that regulators take a closer look at Tether and its operations to ensure that it is operating legally and ethically. Some bond portfolios need to hold long-duration bonds due to their mandate. Or will it be more like the SEC's GME report which was a total joke and nonexistent? However, this investigation serves as a reminder that stablecoin issuers are under constant regulatory scrutiny and must remain compliant with relevant rules and laws. 47.000.000.000 $!???" The gap between nominal GDP output growth and long-term Treasury rates may approach record levels soon. It's important to consider why Binance is making this decision now. The great news is should be able to look back on prior posts, in the future, and see how spot on or off base DD ended up being. Citadel is playing the same criminal game with U.S. government bonds as it has with other meme stocks. I think time will tell. Instead, the easiest way for an individual investor to short bonds is by using an inverse, or short ETF. The CEOs of Reddit, Robinhood, Citadel Securities and Melvin Capital testified about the circumstances surrounding the GameStop short squeeze and the factors driving Robinhood's decision to . What are your thoughts on this? In the case of Binance, their inability to provide a clear and consistent explanation of the misplaced funds should serve as a warning sign to investors to carefully consider their options before entrusting their assets to the exchange. Commodities We are one of the largest alternative investment managers in the commodities markets. Is this happening to you frequently? The thesis is simple and compelling: The Dollar will have to be dramatically devalued in order for the United States (people, businesses, and Government alike) to remain solvent. Sound familiar? Is this happening to you frequently? Share Your Design Ideas, New JerseysMurphy Defends $10 Billion Rainy Day Fund as States Economy Slows, This Week in Crypto: Ukraine War, Marathon Digital, FTX, Photographer: Sarinya Pinngam/EyeEm/Getty Images. That's the question that comes to mind after reading the news that PayPal is holding millions of dollars worth of these digital assets. https://bit.ly/3mn2DzM, Hyperinflationary periods have a devastating impact on individuals and economies. A total train wreck in the dollars exchange rate could quickly lead to even higher inflation and interest rates in 2022, nicely above 5%. Seeks daily investment results, which correspond to twice (200%) the inverse of the daily performance of the Barclays Capital 7-10 Year U.S. Treasury Index. Ape u/atobitt has discovered this: https://lnkd.in/eMX9esKq and has published an article about it The ETF holds treasury bonds with an average maturity of 25.66 years, average coupon. The United States dollar, with the privilege of being the global reserve currency - maintains a special place in the minds of many investors: It is the go-to safe haven in times of crisis. https://bit.ly/3Rq6rvq. The U.S. bond market has enjoyed a strong bull run over the past few years as the Federal Reserve has lowered interest rates to historic low levels. Fund expenses, including management fees and other expenses were deducted. In conclusion, while it might seem convenient to use PayPal to store your crypto assets, it's important to consider the risks and drawbacks of doing so. Specifically, an explosion in the US federal budget deficit the official arrival of QE-infinity and the fact that this time around QE is facilitating true helicopter money in the form of $1,200 stimulus checks. Get our 10 year US Treasury Bond Note overview with live and historical data. However, the funds' dependence on short-term wholesale funding, the lack of permanence in their capital base, and their demonstrated high risk appetite weigh on the ratings," S&P Global Ratings stated today. I am not receiving compensation for it (other than from Seeking Alpha). This article should be the first step in your due diligence process. 2 ETFs For Shorting Treasuries TBF - ProShares Short 20+Treasury This ETF provides the inverse performance of the well-known and popular TLT ETF. Michael Burry bet on Tesla stock to fall and inflation to hammer long-dated bonds. By owning the short ETF, the investor is actually long those shares while having short exposure to the bond market, therefore eliminating restrictions on short selling or margin. Sign up for alerts Citadel Finance LLC today completed a $600 million offering of 3.375% 5-year senior notes due March 9, 2026, at T+275, or 25 bps through early whispers. hard assets, gold and silverStocks can be a great investment (and will be in the future) at the right priceI expect the valuations to contract in the medium term. Owning low-yield bonds is now a lose-lose proposition as the coronavirus economy fades, and the recovery gets more pronounced from here. Bloomberg TV. With a 1.65% trailing cash payout from TLT, a robust increase in long-term rates (becoming more necessary to save the dollar's value) back above 3% would devastate the price of this ETF. Two titans of global finance have come out in recent weeks screaming the U.S. bond market is headed for a massive implosion or at the least a prolonged period of losses. increasing liquidity in order to bid up asset prices and artificially suppress interest rates. It's a tell, and it tells me that bond yields are a topic in the general population and the bond market is now becoming serious competition for the dollars that were in the stock market. Daily 20 Year Plus Treasury Bear 3x Shares. Using decades of history, one financial data truism standing the test of time and based in logic/reason is long-term interest rates in America have largely mimicked changes in nominal GDP. Investors should also be wary of investing in USDT or any other cryptocurrency without doing thorough research and due diligence. On the internet hard to tell fact from fiction. A protective putwill effectively create a lower bound. Fortunately, there are a number of ways that the average investor can gain short exposure to the bond market without having to sell short any actual bonds. https://bit.ly/3xRM9Cg. This means that they will return a multiple in the opposite direction of that of the underlying. Disclosure: I am/we are short TLT. Your trader will talk to the sales coverage (b/d's) to find out if the issue can be borrowed and at what rate. Long-term equity anticipation securities (LEAPS) are options contracts with expiration dates that are longer than one year. The holder of these ETFs may realize losses if the bond market remains flat over a longer-than-expected period. The COVID-19-induced crisis has resulted in an explosion of federal debt and with it a growing crowd of investors voicing their concerns about unsustainable debt levels, the acts of the federal reserve, and the value of the dollar. Musk Made a Mess at Twitter. Many individual investors, while able to use derivative instruments to hedge existing positions, are unable to trade them naked. pisces rising compatibility Sept. 23, 2019 2:12 pm ET. This revelation raises serious questions about the legitimacy and transparency of Tether and its operations. bond market, and allowing capitalism to decide what fair interest rate levels should be, is found in reality. Despite the success thus fur, I don't believe that the Federal Reserve can suppress long term interest rates forever. Compared to a relatively stable U.S. currency situation for decades, none of us in America have experienced a true currency crisis, or what repercussions a 30-50% drop in the dollar would unleash on world trade and wealth movements. A short position in bonds also has the potential to generate high returns during inflationary periods. There will be a borrow cost. Private market loan and company lending rates have generally settled at numbers above Treasuries, closer to nominal GDP, depending on the degree of inherent default risk. Citadel is shorting U.S. government bonds, which will lead to the MOTHER OF ALL MARGIN CALLS and thus the financial meltdown of the global financial system Trading Policy. Some short ETFs are also leveraged or geared. The author's opinions expressed herein address only a small cross-section of data related to an investment in securities mentioned. Going 'long' would indicate the opposite and that an investor believes prices will rise and so buys that asset. For the first time . Is it really a good idea to let a third-party service hold your cryptocurrencies or stablecoins? Using PalaFox to Wash with #Citadel Advisors then to #CitadelGlobal (Master Fund) then to Citadel Kensington Fund where they wash with KGSF Offshore. Sprinkle in the crazy retail investor euphoria of early 2021, and I can promise you, what you think you know about American financial markets could rapidly be turned on its head with little notice. Would it surprise you to know that the FICC has $47,000,000,000 (MILLIONS) in DEPOSITS alone for unsettled Treasury securities? The Federal Reserve is expected to announce a dramatic change in policy today that will pave the way for a first rate hike next year. Past performance is no guarantee of future returns. Deal with it. Do you think we can sustain interest rates of 0.5% to 2.0% in the Treasury market with inflation running double or more the yield offered by risk-free bonds? In one telltale sign of which way theyre leaning, demand to borrow 10-year notes in the repurchase-agreement market is so great that rates have gone negative, likely part of a move to short the maturity. With what are these billions backed and where's the proof? Add to this evidence the rising possibility of Trump losing re-election and the implications such a result would have for future debt levels and the case for dollar devaluation becomes increasingly compelling. Take control of your investments and stay informed . Sometimes in investing, its best to keep things simple. As the economy continues to recover, the Fed will need to carefully consider the best path forward in terms of monetary policy and ensure that